Economics 318: Economics of Technology

Professor Christiaan Hogendorn
Fall 2007
Prof. Hogendorn's Homepage Course Policies

Syllabus

Baumol = William Baumol, The Free Market Innovation Machine, Princeton University Press, 2002.
Numbered readings are required, other readings are extra.
Economics of Innovation Website (Lausanne)
Advanced Operating System

I. Introduction
Sept. 4 T 1. Organization
  1. Baumol, Preface
  2. Book Review in The Economist, May 18, 2002.
Sept. 6 Th 2. Market Failures
  1. Baumol, Chapters 1,2.
  2. Arrow, Kenneth, "Economic Welfare and the Allocation of Resources for Invention," in Richard Nelson, ed., The Rate and Direction of Inventive Activity, Princeton University Press, 1962, pp. 609-625. (Prof. Hogendorn)
Sept. 11 T 3. Schumpeterian Competition
  1. Baumol, Chapter 3,4.
  2. *Kohn, Meir, and John Scott, "Scale Economies in Research and Development: The Schumpeterian Hypothesis," Journal of Industrial Economics, Vol. 30, No. 3, March, 1982, pp. 239-249. (The Truth, Nick)
  • Nakamura, Leonard, Economics and the New Economy: The Invisible Hand Meets Creative Destruction, Business Review Federal Reserve Bank of Philadelphia, July/August 2000. pp. 15-30.
  • Nelson, Richard, "Schumpeter and Contemporary Research on the Economics of Innovation," Chapter 3 in The Sources of Economic Growth, Harvard University Press, 1996: 87-99.
  • *Stiglitz, Joseph, "Technological Change, Sunk Costs, and Competition," Brookings Papers on Economic Activity, 1987, Issue 3, pp. 883-937. (Just skim pp. 911-925.)
Sept. 13 Th 4. Technological Revolutions
  1. Mokyr, Joel, "The Industrial Revolution and Beyond," Chapter 3 in The Gifts of Athena, Princeton University Press, 2002: 78-118.
  2. Jovanovic, Boyan and Peter L. Rousseau, "General Purpose Technologies," NBER Working Paper 11093, 2005. (?, ?)
  • Mokyr, Joel, "Innovation in an Historical Perspective: Tales of Technology and Evolution," Chapter 2 in Steil, Benn, David Victor, and Rochard Nelson, eds., Technological Innovation and Economic Performance, Princeton University Press, 2002: 23-46.
  • *Bresnahan, Timothy, and M. Trajtenberg, "General Purpose Technologies 'Engines of Growth'?" Journal of Econometrics, Vol. 65, 1995, pp. 83-108.
  • David, Paul, "The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox," American Economic Review Papers and Proceedings, 80(2), 1990: 355-361.
  • DeLong, J. Bradford, and Lawrence Summers, "The 'New Economy': Background, Historical Perspective, Questions, and Speculations," in Economic Policy for the Information Economy Federal Reserve Bank of Kansas City, 2001, pp. 11-63.

II. Economic History of Technology
Sept. 18 T 5. The Industrial Revolution
  1. Baumol, Chapter 14.
  2. Mokyr, Joel, "The Industrial Revolution," Chapter 10 in The Lever of Riches, Oxford University Press, 1990: 239-269. (Dan, Graham)
  • Rosenberg, Nathan, "The Historiography of Technical Progress," Chapter 1 in Inside the Black Box: Technology and Economics, Cambridge University Press, 1982: 3-33.
  • Ashton, T. S., The Industrial Revolution: 1760-1830, Oxford University Press, 1948.
Sept. 20 Th 6. Inequality, Discontent, Marx
  1. Rosenberg, Nathan, "Marx as a Student of Technology," Chapter 2 in Inside the Black Box: Technology and Economics, Cambridge University Press, 1982: 34-54.
  2. Boyer, George "The Historical Background of the Communist Manifesto," Journal of Economic Perspectives, 12(4), 1998: 151-174. (Alex, Jake)
  • Ashton, T. S., "Capital and Labour," Chapter 4 in The Industrial Revolution: 1760-1830, Oxford University Press, 1948: 94-126.
Sept. 25 T 7. The Second Industrial Revolution
  1. Rosenberg, Nathan, "Technological Interdependence in the American Economy," Chapter 3 in Inside the Black Box: Technology and Economics, Cambridge University Press, 1982.
  2. Chandler, Alfred, "Creating Organizational Capabilities: The Great Industries [of Germany]," Chapter 12 in Scale and Scope: the Dyanimics of Industrial Capitalism, Harvard University Press, 1990: 456-502. (JZ, The Truth)
  • Nye, David, "Flexible Factory," Chapter 5 in Electrifying America, MIT Press, 1990: 185-237.
  • Fear, Jeffrey, "German Capitalism," Chapter 5 in McCraw, Thomas, ed., Creating Modern Capitalism, Harvard University Press, 1995: 133-182.
Sept. 27 Th 8. The ICT Revolution
  1. Rhoads, Christopher, "Missed Calls: AT&T Inventions Fueled Tech Boom, And Its Own Fall," Wall Street Journal, Feb. 2, 2005. pg. A1.
  2. Langlois, Richard "Computers and Semiconductors," Chapter 10 in Steil, Benn, David Victor, and Rochard Nelson, eds., Technological Innovation and Economic Performance, Princeton University Press, 2002: 265-284. (Bobby, Mike)
  3. Mowery, David and Timothy Simcoe, "The Internet," Chapter 9 in Steil, Benn, David Victor, and Rochard Nelson, eds., Technological Innovation and Economic Performance, Princeton University Press, 2002: 229-264. (Amanda, Liz)
  • Olegario, Rowena, "IBM and the Two Thomas J. Watsons," Chapter 10 in Thomas McCraw, ed., Creating Modern Capitalism, Harvard University Press, 1995.

III. Microeconomic Theory of Innovation
Oct. 2 T 9. Modularization
FIRST EXAM
  1. Richard Langlois, "Modularity in Technology and Organization," Journal of Economic Behavior and Organization, 49, 2002: 19-37.
  2. Guth, Robert, ``Code Red: Battling Google, Microsoft Changes How It Builds Software,'' Wall Street Journal, Sept. 23, 2005. pg. A1.
  • Temin, Peter, "The Industrialization of New England: 1830-1880," Chapter 3 in Engines of Enterprise: An Economic History of New England, Harvard University Press, 2000: 109-152.
Oct. 4 Th Technology Presentations
Institute for the Future
  • Online Video (Alex, Bobby, Greg, Jake, Ross)
  • Pharmaceuticals (Dan, Graham, Hwinei, Nick, The Truth)
  • Internet and Business Models (Bach Dao, Liz, Max)
  • Social Networking Sites (Alpay, Jonah, JZ, Mufaro, Shivani)
  • Ethanol (Jeremy, Matt)
Oct. 9 T 10. Entrepreneurship
  1. Baumol, Chapter 5.
  2. *Murphy, Kevin, Andrei Shleifer, and Robert Vishny, "The Allocation of Talent: Implications for Growth," The Quarterly Journal of Economics, 106(2), 1991: 503-530. (Greg, Tim)
  • Koehn, Nancy, "Josiah Wedgwood and the First Industrial Revolution," Chapter 2 in Thomas McCraw, ed., Creating Modern Capitalism, Harvard University Press, 1995.
  • David Landes, "What Do Bosses Really Do?" Journal of Economic History, 46(3), 1986: 585-623.
Oct. 11 Th 11. Technology and Investment
  1. Brocas, Isabel, and Juan Carrillo, "Entrepreneurial Boldness and Excessive Investment."
  2. *Daron Acemoglu, Pol Antras and Elhanan Helpman, "Contracts and Technology Adoption," American Economic Review, 97(3), 2007. (Jonah, Shivani)
  • Kamien, Morton, and Nancy Schwartz, "Schumpeterian Hypotheses," Chapter 2 in Market Structure and Innovation, Cambridge University Press, 1982: 22-48.
Oct. 16 T OCTOBER BREAK
Oct. 18 Th 12. Finance
  1. Perez, Carlota, "Financial Capital and Production Capital," Chapter 7 in Technological Revolutions and Financial Capital, Edward Elgar, 2002: 71-80. (Alpay, Mufaro)
  2. Perez, Carlota, "The Sequence and its Driving Forces," Chapter 14 in Technological Revolutions and Financial Capital, Edward Elgar, 2002: 151-158. (Alpay, Mufaro)
  3. Jovanovic, Boyan and Peter Rousseau, "Mergers as Reallocation," NBER Working Papers 9279, 2002.

IV. Commons and Technology
Oct. 23 T 13. Commons
  1. Ostrom, Elinor, "Reflections on the Commons," Chapter 1 in Governing the Commons, Cambridge University Press, 1990: 1-28.
  2. Faulhaber, Gerald, "The Question of Spectrum: Technology, Management, and Regime Change," working paper, 2005. (Greg, Tim)
Oct. 25 Th 14. Clusters, Spillovers, and External Economies
  1. Brett Frischmann and Mark Lemley "Spillovers," Columbia Law Review, 100(2), 2006.
  2. Gordon Moore and Kevin Davis, "Learning the Silicon Valley Way," chapter 2 in Bresnahan and Gambardella, eds., Building High-Tech Clusters : Silicon Valley and Beyond, 2004: 7-39.
  • Timothy Bresnahan and Alfonso Gambardella, "Old-Economy Inputs for New-Economy Outcomes : What Have We Learned?" chapter 2 in Bresnahan and Gambardella, eds., Building High-Tech Clusters : Silicon Valley and Beyond, 2004: 331-358.
Oct. 30 T 15. Technology Sharing and Consortia
  1. Eric Brousseau and Thierry Penard, "The Economics of Digital Business Models: A Framework for Analyzing the Economics of Platforms," Review of Network Economics, 6(2), 2007: 81-114.
  2. *Baumol, Chapter 6-7. (Jeremy, "Matt")
Nov. 1 Th 16. Compatibility and Standards
  1. *Arthur, W. Brian, "Competing Technologies, Increasing Returns, and Lock-in by Historical Events," Economic Journal, 99(1), 1989: 116-131. (JZ, Ross)
  2. Thomas Eisenmann, Geoffrey Parker, Marshall Van Alstyne, "Platform Envelopment," SSRN working paper, 2007.
  • Bresnahan, Timothy, and Shane Greenstein, "Technological Competition and the Structure of the Computer Industry," Journal of Industrial Economics, 47(1), 1999: 1-40.
  • Puffert, Douglas, "The Standardization of Track Gauge on North American Railways, 1830-1890," The Journal of Economic History, Vol. 60, No. 4, December 2000, pp. 933-960.
  • *Cremer, Jacques, Patrick Rey, and Jean Tirole, "Connectivity on the Commercial Internet," Journal of Industrial Economics, Vol. 48, No. 4, December 2000, pp. 433-472. (Only read through the end of section IV.)
Nov. 6 T 17. Intellectual Property Rights
  1. *Baumol, Chapter 8. (Amanda, Liz)
  2. William Landes and Richard Posner, The Economic Structure of Intellectual Property Law, Cambridge, MA: Harvard University Press, 2003, Chapters 1, 2. (?, ?)
  • Peter Menell and Suzanne Scotchmer, "Intellectual Property," forthcoming in Handbook of Law & Economics, June 2005.
  • Giovanni Ramello, "Intellectual Property and the Markets of Ideas," Review of Network Economics, 4(2), June 2005.
  • Hal Varian, "Copying and Copyright," Journal of Economic Perspectives, 19(2), 2005: 121-138.
Nov. 8 Th 18. Recouping Fixed Investment
  1. *Baumol, Chapter 9-10. (Max, Bach Dao, Hwinei)
  2. Yi Qian, "Do National Patent Laws Stimulate Domestic Innovation in a Global Patenting Environment?" Review of Economics and Statistics, 89(3), 2007: 436-453. (Nick, Ross)
  • Berndt, Ernst, "Pharmaceuticals in U.S. Health Care: Determinants of Quantity and Price," Journal of Economic Perspectives, 16(4), 2002: 45-66.
  • Perelman, Michael, "Retrospectives: Fixed Capital, Railroad Economics and the Critique of the Market," Journal of Economic Perspectives, 8(3), 1994: 189-195.
  • Kremer, Michael, "Pharmaceuticals and the Developing World," Journal of Economic Perspectives, 16(4), 2002: 67-90
Nov. 13 T 19. Open Source
  1. *Josh Lerner and Jean Tirole, "Some Simple Economics of Open Source," Journal of Industrial Economics, 50(2), 2002: 197-234. (Alex, Jake)
  2. *Robert Solow, "Technical Change and the Aggregate Production Function," Review of Economics and Statistics, August 1957: pp. 312-320. (Alpay, Mufaro) (moved from class 20)
  • Josh Lerner and Jean Tirole, "The Economics of Technology Sharing: Open Source and Beyond," Journal of Economic Perspectives, 19(2), 2005: 99-120
  • Lemley, M. and L. Lessig (2001) "The End of End-to-End: Preserving the Architecture of the Internet in the Broadband Era," UCLA Law Review, 48: 925-972.

V. Macroeconomic Growth
Nov. 15 Th 20. Growth Theory
  1. Eric Raymond, "The Magic Cauldron," Chapter 5 in The Cathedral and the Bazaar, O'Reilly, 1999: 137-194. (Jonah, Shivani) (moved from class 19)
  2. Dale Jorgenson, "Information Technology and the U.S. Economy," American Economic Review, 91(1), 2001: 1-32. (Max, Bach Dao, Hwinei)
Nov. 20 T 21. Endogenous Growth
  1. *Baumol, Chapter 15.   #Notes,Baumol Chapter 15 (Bobby, Mike)
  2. *Kevin O'Rourke, Ahmed Rahman, and Alan Taylor, "Trade, Knowledge, and the Industrial Revolution," NBER Working Paper 13057, April 2007. (Dan, Graham)
  • Robert J. Gordon, "Does the 'New Economy' Measure Up To the Great Inventions of the Past," Journal of Economic Perspectives, 14(4), 2000: 49-74.
  • Grossman, Gene, and Elhanan Helpman, "Endogenous Innovation in the Theory of Growth," The Journal of Economic Perspectives, Vol. 8, No. 1, Winter, 1994, pp. 23-44.
Nov. 22 Th THANKSGIVING
Nov. 27 T 22. Feedback and Cardwell's Law
  1. *Arnold C. Harberger, "A Vision of the Growth Process," American Economic Review, March, 1998: 1-32. (Jeremy, Shivani)
  2. Mokyr, Joel, "The Political Economy of Knowledge: Innovation and Resistance in Economic History," Chapter 6 in The Gifts of Athena, Princeton University Press, 2002: 78-118. (Max, Bach Dao, Hwinei)
  • Baumol, Chapter 16.

VI. Perspectives on Technologies
Nov. 29 Th Technology Presentations 1
  • Social Networking Sites (Alpay, Jonah, JZ, Mufaro, Shivani)
  • Pharmaceuticals (Dan, Graham, Hwinei, Nick, The Truth)
Dec. 4 T Technology Presentations 2
  • Hybrid Cars (Max, Amanda, Bach, Liz)
  • Ethanol (Jeremy, "Matt")
Dec. 6 Th 23. Conclusion
  • Online Video (Alex, Bobby, Greg, Jake, Ross)
  1. Vania Sena, "The Return of the Prince of Denmark: A Survey on Recent Developments in the Economics of Innovation," The Economic Journal, 114, 2004: 312-332. (Jeremy, "Matt")